The house cup tournament began with the first generation of Hogwarts students. One student from each of the houses will complete a series of dangerous tasks. The winner would not only win the cup, he would win eternal glory. If I remember correctly, the house cup tournament was disbanded after one semester when one of the students died. Don't worry, it was a Hufflepuff.

Quirrell: The house cup tournament is a time-honored tradition, but where does this competition come from and what are the roots of the competition?